ORLANDO, FL – Social Security beneficiaries may face disappointment next year as the increase in benefits is forecasted to be the lowest in the last four years, according to a recent warning from The Senior Citizens League (TSCL). Each year, Social Security payment amounts change based on the cost of living adjustment (COLA), which takes into account inflation and provides seniors with a new monthly check. The past few years have seen significant increases in Social Security payments due to inflation, with a 2024 COLA of 3.2 percent resulting in a high increase of 8.7 percent in 2023. However, TSCL anticipates a significantly smaller COLA of 1.4 percent for 2025, the lowest since 2021’s 1.3 percent.
Inflation reached 3.4 percent in December, and if it continues to improve, the reduced increase could lead to financial challenges for seniors facing higher-than-average costs for housing and hospital care. Experts such as Kevin Thompson, a certified financial planner and the founder and CEO of 9i Capital Group, are concerned about the impact of the slowing increase in inflation on retirees receiving Social Security, particularly in covering rising food and healthcare prices.
With roughly half of seniors depending on Social Security for at least 50 percent of their income, and 25 percent relying on it for 90 percent of their income, the ability to cover healthcare costs remains a major challenge. Thompson noted that healthcare costs continue to rise, surpassing inflation and becoming a significant expense for Social Security recipients. The potential 1.4 percent COLA increase would likely have little to no impact on the rising costs, which poses a threat to seniors’ financial stability.
Looking ahead, concerns persist about the future of Social Security, as the SSA faces a possible 23 percent benefit cut in 2033 if no reform action is taken. Even the 3.2 percent COLA increase in 2024 has left many seniors dissatisfied and financially strained, with 70 percent of single seniors struggling financially, according to a report by Atticus, a legal help platform.
The small COLA increase combined with climbing Medicare premiums has prompted experts to voice their concerns. Christopher Hensley, a financial advisor and president of Houston First Financial Group, mentioned that the limited increase in Social Security benefits, coupled with rising healthcare costs, creates a challenging financial situation for seniors. This sentiment was echoed by many seniors who expressed dissatisfaction with the 2024 COLA increase and its inability to alleviate financial strains.
As seniors brace for a potentially negligible increase in Social Security benefits for 2025, concerns about their financial well-being continue to grow. The prospect of having to cope with rising costs while facing a minimal COLA raise raises significant challenges for seniors, further highlighting the ongoing financial struggles they experience.